Latest Federal Circuit Court Cases, 6/4/18

Overview

In these two, published, precedential orders denying rehearing en banc, the Federal Circuit paved the way for significantly more involved and prolonged litigation concerning whether patents claim ineligible subject matter under 35 U.S.C. § 101, and the likelihood that some juries may be called upon to decide patent eligibility issues.

In 2014, the Supreme Court articulated a two-part test for determining patent eligibility in Alice. Alice instructed courts to determine (1) whether a patent claims abstract ideas, laws of nature, or natural phenomena; and (2) whether the claims can be implemented using well-understood, routine and conventional tools. If the claims lack an “inventive concept,” they are ineligible for patent protection. In most cases, the second step invoked concepts such as basic economics, fundamental computer systems, or other ideas that were so “well understood” that the courts could take judicial notice of such. Because of this, and the fact that § 101 eligibility is a question of law, courts routinely made dispositive rulings on patent eligibility on the pleadings or on summary judgment.

In both Aatrix and Berkheimer, the Court reviewed step two of the Alice framework and found that there was a dispute of fact as to whether a claim element would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time, and remanded the case for further proceedings. In the case of Berkheimer, that apparently meant remanding for trial – a remarkable and unusual development in § 101 jurisprudence.

Each of the orders was accompanied by one opinion concurring in the denial of the petition written by Judge Moore, and joined by Judges Dyk, O’Malley, Taranto, and Stoll; and a second opinion concurring in the denial, penned by Judge Lourie and joined by Judge Newman. Only Judge Reyna issued a dissenting opinion.

In these orders, Judge Moore wrote that “Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact.” Thus, because the patent eligibility inquiry under § 101 may require an analysis of “underlying factual questions,” step two of Alice may contain factual determinations that should not be decided by judges as a matter of law.

Judge Moore explained that the holdings in Berkheimer and Aatrix are narrow and do not deviate from well-established general legal principles: “Whether a claim element is well-understood, routine and conventional to a skilled artisan in the relevant field at a particular time is a factual question, and Berkheimer and Aatrix merely hold that it must be answered under the normal procedural standards . . ..”

Judge Lourie (who authored the en banc opinion in Alice that was adopted and affirmed by the Supreme Court), suggested that Congress intervene and sort out the § 101 dilemma: “Individual cases, whether heard by this court or the Supreme Court, are imperfect vehicles for enunciating broad principles because they are limited to the facts presented. Section 101 issues certainly require attention beyond the power of this court.” Judge Lourie explained that “Section 101 does not need a two-step analysis” because claims that merely make use of ineligible concepts “should be patent-eligible, provided they meet the other tests of the statute.”

Judge Reyna dissented, maintaining that the § 101 inquiry is a question of law and that the Court’s decisions are contrary to “well-established precedent.” The § 101 patent eligibility determination is solely a question of law that can be resolved “without the need to look beyond the four corners of the patent.”

We previously wrote about the significance of the panel decisions when they were issued, treating both Aatrix and Berkheimer as the “Case of the Week” in their respective weeks. See our write-ups here and here. The en banc decisions issued last week, in which only one judge dissented, are again our Case of the Week because of the significance to patent litigators of this development in the law and the guidance posed by the majority of the Court on these issues.

In an appeal from a patent examination, the Federal Circuit reversed and remanded. The examiner had held the claims invalid as obvious. Durance appealed to the PTAB, which affirmed the examiner’s rejection. The PTAB declined to consider certain evidence submitted by Durance in his reply brief, citing 37 C.F.R. § 41.41. On appeal the Federal Circuit observed that the examiner’s arguments shifted numerous times during prosecution and held that “under these circumstances of multiple shifting articulations,” there was a lack of clarity about the basis of the Board’s ultimate finding. The Court also held that the reply evidence should have been considered because it was submitted in response to new arguments raised for the first time in the examiner’s answering brief.

In an appeal from a district court summary judgment ruling of invalidity for indefiniteness, the Federal Circuit reversed. The district court had held that two claims terms that incorporated the terms “program” and “user interface code” to be means-plus-function terms under 35 U.S.C. § 112(f), and found that they failed to disclose sufficient structure, as required under 35 U.S.C. § 112(b), thus rendering the terms indefinite. The Federal Circuit held that the terms were not means-plus-function terms. The court also held that the terms were not “nonce” terms as used in the patent.

In an appeal from an inter partes review, the Federal Circuit reviewed the PTAB’s decision upholding the validity of a patent in the telecommunications field. The PTAB had found 16 claims not invalid after finding the independent claim not invalid. The Federal Circuit reversed, finding the independent claim both anticipated over a patent “sharing significant disclosure” and obvious over a combination of art. The Court remanded for a determination of the patentability of the 15 dependent claims. Judge Wallach dissented, opining that “[t]he majority improperly steps out of the appellate role and substitutes its own interpretation of the evidence for the PTAB’s.” Judge Wallach also opined in a footnote that the majority opinion was not a holding but was entirely advisory, noting that, by finding the claims both anticipated and obvious, neither determination was necessary to its decision.